Building Strong Partnerships: Compliance Solutions
Streamline the establishment of partnership firms with our expert compliance services. From drafting essential partnership deeds to navigating the Partnership Act, 1932, we’ve got you covered.
Overview
A partnership firm is a type of business organization where two or more individuals come together to operate a business with the goal of sharing profits and losses. The structure, responsibilities, and legalities of a partnership firm in India are governed by the Indian Partnership Act, 1932.
All decisions are duly taken with common assent of the all the Partners. Registration of the partnership firm is at the sole discretion of the partner of the firm and registration of the same is optional as per the provision of the Partnership Act, 1932. Therefore, Partnership is an agreement between 2 or more than 2 persons who have agreed to share the profits of a business carried on by all or any of them acting for all. A Partnership Deed plays fundamental role in any partnership firm which lays down the basics for operating the firm.
- Partnership firm does not have distinct identity from its partners.
- Partners are liable for business / work performed under Partnership.
- Foreign National cannot become partner.
- As per the Income Tax Act, 1961, Audit is applicable in case turnover is more than One Crore.
Minimum Requirement
- Registration of Partnership firm is optional. Though it is always advisable to get the same registered under Indian Partnership Act, 1932.
- Registration under Indian Partnership Act, 1932 normally takes 4-5 days.
- There is no such requirement of minimum capital to register a partnership firm.
Features
- There should be in any event 2 persons to form the Partnership Firm.
- Every partner act as an agent of another partner.
- Business of Partnership firm can be carried on by all the accomplices or any of them representing all.
- Every Partner contributes his capital in the concurred proportion.
- Liability of each accomplice is boundless.
- Partnership Firm can be registered firm or un-registered firm under the Partnership Act, 1932.
What is included in this
FAQs
There is no specific format of partnership agreement or deed, it is drafted as per the requirements of the partner.
Audit of accounts are optional under Indian Partnership Act, 1932.
Tax audit is applicable in case turnover is more than One Crore.
Minimum 2 partners and Maximum No Limit. However, as per Rule 10 of the Companies (Miscellaneous) Rules, 2014 no partnership shall be formed consisting more than 50 persons for the purpose of carrying on any business, unless it is registered as a Company under the Companies Act, 2013 or is formed under any other law for the time being in force.
Therefore, in a nutshell, the Companies Act, 2013 puts a bar on the maximum number of partners in a partnership firm.
| Particular | Limited Liability Partnership | Partnership Firm |
| Registration | LLP comes into existence only after registration | It is not necessary to register a partnership firm. Partners may or may not register their Firm. |
| Act | LLP is governed by LLP Act, 2008 | Partnership Firm is governed by Partnership Act, 1932 |
| Perpetual Succession | It enjoys perpetual succession | Does not have perpetual succession |
| Status | Separate Legal Entity | No Separate Legal Entity |
| Designated Partner | Minimum two designated partners required | No concept of Designated Partner. However, it is required to have minimum two partners. |
| Residency | One partner must be resident in India | No such requirement |
| Public interface | Documents are made available in th public domain after payment of certain fees to the Ministry of corporate affairs | No such facility for partnership firm. |
| Compliance | Various compliances are required including annual return, filing statement of asset and liability etc. | Comparatively less compliance |
